16.04.2021

Big Tech and the Cross-Border Monopoly Problem

David Moscrop asks whether American and European pressures and precedents encourage Canada to take a tougher line on anti-trust action against large tech firms.

For years, states have been struggling to manage the growth and reach of technology companies whose products and services condition contemporary social, political, and economic life at home and abroad. The public sphere is now, in part, virtual. Countries thus face the challenge of regulating these companies, which include Google, Facebook, and Twitter; while balancing civil rights concerns including robust speech protection and privacy rights. Further confounding attempts at sorting out what is to be done is the fact that while information and users want to cross borders, the state system and its legal-regulatory capacity to act is delineated by these same border lines that the digital public sphere tries to minimize. So, even though digital service users find themselves in overlapping spaces sharing common information, the jurisdictions who regulate those spaces for those within their state limits set their own rules. The situation is a mess, and there is no international standard, though there is cross-border cooperation, inspiration, and shared technical standards. Indeed, there may be no international standard that emerges. Nor may we want one. Yet cross-border idea sharing may help states produce best practices that work for them.

 

Threat assessment: Big Tech's challenges to democracy...

There are a handful of major concerns about behemoth technology companies and their effect on politics, including basic civil liberties such as free speech, access, abuse and harassment, and privacy rights; as well as their discourse distorting capacity to facilitate the spread of misinformation and disinformation. Anti-trust concerns, however, stand out as a meta-issue – affecting who is in the marketplace and what companies can get away with – in addition to the manifold other effects on politics. No state or supranational organization has an unblemished record or ideal plan yet for managing these concerns, but some are ahead of others. Canada is not in the vanguard, despite its proximity to the United States and the comprehensive free trade agreement that links the two countries.

The idea that large tech firms have amassed unreasonable power seems true. Last year, that impression was supported by the House Judiciary Committee on Antitrust, which studied the question and found that “companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.” All eyes are on Google, Facebook, Amazon, and Apple; their market share or market-share analogues, and their capacity to shape the business of state and citizens alike.

In March, Giovanni Russonello, writing in the New York Times in the wake of House committee testimonies from tech leaders, interviewed University of Georgia media law professor Jonathan Peters, who addressed the question of whether the Biden administration or Congress would pursue “real change” in tech policy regulation, as the “self-regulation” approach hitherto favored by the U.S. appears to be reaching its limits. Peters cited the possibility of anti-trust action against the tech giants but pointed to a divide between Republicans and Democrats on other regulations, with the former concerned “that platforms censor conservative viewpoints”, and the latter worried about the spread of mis- and disinformation. The current state of U.S. politics suggests that regulating tech firms will be yet another partisan issue, and that the strategic interests of each party will remain inseparable from approaches to managing digital players. Still, breaking up the big tech monopoly is on the agenda.

 

...and what Canada is proposing to do about it

In Canada, antitrust – strictly speaking, “competition law” – talk has been muted. Writing in the National Post, Vass Bednar and Robin Shaban looked south at recent Federal Trade Commission and National Economic Council appointments – Lina Khan and Tim Wu – and concluded the choices “have reignited optimism that the United States government will finally take action against Big Tech giants like Google and Facebook for their anti-competitive behavior.” They then asked “why isn’t Canada taking a similar approach?” Bednar and Shaban argue that Canada’s Competition Bureau – “an independent law enforcement agency” that “ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace” – and competition laws set a higher standard for action, and thus constrain anti-trust cases compared to the U.S. and European Union. The Competition Bureau’s powers are also limited compared to American counterparts, for instance, in the latter’s ability to collect information about business dealings. They conclude, quite rightly, that Canada’s laws are outdated and “preclude our government from taking meaningful steps that could protect Canadian consumers from the dominance of Big Tech firms like Google and Facebook.”

Politicians in the United States at the state and federal levels also seem to be more interested in antitrust action than those in Canada, who appear comfortable with the tech monopoly and, perhaps, relatively powerless as a state of 38 million compared to 328 million in the U.S. or 448 million in the E.U. Daniel Tsai, a lecturer at the University of Toronto and former senior government policy adviser, pointed out in the Toronto Star that “In the U.S., numerous antitrust lawsuits have already been filed by at least 38 states against big tech for antitrust violations and to curtail big tech’s dominant monopoly power.” In Europe, between 2017 and 2019, E.U. anti-trust officials fined Google $9.5 billion. In Canada? Not so much as the Competition Bureau tends to indulge its preference for “monitoring” the situation in a “monopoly friendly” country. Indeed, in 2019, the Tyee’s Bryan Carney interviewed former Competition Bureau commissioner John Pecmanon the state of the bureau and corporate concentration. Pecman advocated for more bureau power and resources to protect consumers. The Bureau remains weak and might, in fact, breed an unwillingness to do something about monopolies.

In the long run, American and European pressures and precedents may encourage Canada to take a tougher line on anti-trust action against large tech firms, but the country has shown no indication that it will lead on the issue. The issue is not state size, but lack of will. That, however, may be changing in one area, though perhaps not the right one.

 

The Australian model

Earlier this year, Australia moved against big tech firms as the Australian Competition and Consumer Commission proposed advertising reforms to constrain the companies, including user choice over what personal data companies can sell. The Australian government drafted a law requiring companies to pay for the news content that appears in their feeds, backed by fines into the millions for failure to comply. In February, the law passed. As Jon Porter reported in the Verge, “The News Media Bargaining Code requires Facebook and Google to pay a negotiated fee to link to or use news content, and includes a mandatory arbitration process if an agreement on fees can’t be reached. It also asks tech companies to give advance notice to news organizations about upcoming algorithm changes.” The law is meant to support news media outlets whose content is shared online on social media and search engines, compensating them for lost advertising dollars. In theory, this approach is meant to bolster competition by providing fair and level terms between media and tech companies -- even though the content that appears links back to the media companies.

Now, Canada is considering a similar law that might take the form of the Australian model. Whether the law will be effective at restraining the tech giants and bolstering competing advertisers and media outlet remains to be seen, especially given the rather pointed criticism that the law is a handout to legacy media outlets rather than proper monopoly control or trust-busting. It is certainly hard to see how it will encourage consumer protection, innovation, or new competition -- especially if legacy media companies crowd out new entrants in compensation arrangements. These are new paths we are cutting, and it remains to be seen what possible unintended consequences such policies might bring – including possibly undermining consumer choice and media organization reach for those left out of news sharing deals. Australia ought to be prepared to reverse course if the “cure” in this instance proves worse than the illness, and Canada, which has agreed to coordinate with Australia on this issue, ought to nonetheless take its time, watch what happens in Australia, and then decide whether and how to adopt its own law.

 

Consumers as residents and citizens

Ultimately it will take time for us to assess the status, effect, and actions necessary to sort out big tech monopolies. It may take a few attempts to get policy right, too. The aim of addressing tech monopolies should be to protect consumers as consumers, but also as residents and citizens. If we are to have a market system, it ought to be a competitive one protected from monopolies that can in turn dictate policy that protects market share or its analogues. We should also protect public spaces, digital or otherwise, but in doing so we should ensure that any anti-trust action we take serves consumers and encourages innovation instead of entrenching legacy media companies by siphoning funds from the margins of tech giants.

FES USA & CANADA

WASHINGTON, DC

+1-202-408-5444
fesdc[at]fesdc.org

OTTAWA, ON
+1-202-408-5444
canada[at]fesdc.org

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